Why the beer tax is a good idea..

Because it’s not high enough to affect beer consumption in this state. While such reasoning may baffle the CNI zealots, it is perfectly rational to (very) modestyl tax one of the most popular products in the state to generate some much-needed state revenue.

Madison’s own Fred Risser, the longest serving state senator in Wisconsin history, proposes raising the beer tax by 15 cents per 6 pack, meaning a customer would pay 18 cents rather than the current 3.6 cents per sixer, which, as you may have guessed,was put in place in 1969. Terese Berceau, also supports the tax (video) but uses what I see as misleading health justifications rather than fiscal ones. Granted, the money collected by the tax is supposed to be used to increase enforcement of drunk driving laws, which would be a worthy long-term goal regardless of the economy and the budget. But, just for the record, the beer tax would be a good way to fund just about anything. Why do specific taxes like these always have to fund specific initiatives?

Anyhow, Risser’s got the right idea. That octogenarian knows his district well enough to know how best to get the citizens paying taxes. The tax is large enough to make a difference in times of deficit but not big enough to deter purchase of beer. The tavern lobby should not oppose this plan because it will have an absolutely negligible effect on their business. Beer is simply too popular and too important in the lives of those who enjoy it and buy it. To those who only buy it occasionally, the tax is even easier to ignore. 15 cents! That means that if you drink a six pack every day you will spend $1 more a week.

Unfortunately a plan this sensible is unlikely to come up for a vote any time soon. Risser is currently the only senator to have signed on to the measure. If it did, you can expect a knee-jerk anti-tax reaction from the campus papers, in particular the Herald editorial board, which tends to subscribe to supply-side arguments to the point of paradox. For instance, in defending the bus fare raise, the board described the fee hike as necessary to avoid tax hikes, just as “enhanced interrogation” is necessary to avoid having to torture people.

4 Responses to “Why the beer tax is a good idea..”

This post reeks of a very marginal understanding of economics, for several reasons. Firstly, the bus fare increase amounts to a tax increase, so using the moniker anti-tax isn’t even appropriate. The board argued, and you should be capable enough of intuiting, that the tax increase comment was intended to mean that those who do not use the services should not be forced to pay for them. You may have your own host of other reasons for disagreeing with this, but the fact is that the board, in essence WAS in essence arguing for a tax increase, just one that was targeted to the people who would use the services paid for by said increase.
And while you’re right that this point on the fare increase amounts to supply side economics (insofar as it favors a flat tax), the beer tax is likewise a flat tax. In terms of structure the two measures are exactly the same.
Finally, the torture argument, although it subscribes to the same whimsical notion of “hyperbole is proper because I’m indignant” pushed by Kyle Szarzynski, would nonetheless make a minimum of sense if the board was arguing for raising the fare to avoid taxing the SAME GROUP OF PEOPLE as the fare increase would.
This is not the case. The tax or increase or whatever you want to call it (fundamentally the same thing) was advocated as a means of NOT taxing other groups that might not use Madison Metro. For as much as you criticize the board for having a knee-jerk response, it seems you wrote this post without taking the time to understand that the two measures were fundamentally the same. Perhaps the board could have been more obvious on the tax raise comment, clarifying that a fare hike amounted to an increase, but your post is much less coherent (in that last paragraph) than the one you are criticizing.

This comment reeks of a marginal understanding of social priorities. Transportation, for those who work and don’t have cars, is a vital community service. It’s our duty to provide transportation for those who don’t have cars, and moreover, the group that “benefits from the metro service” is much bigger than the number of people who actually use it. Employers with employees who don’t have cars, for instance. Beer, as much as I hate to say it, is not a vital community service.

When criticizing the board, I made the exact same point that you made. That the fare increase was “in essence” a tax increase and that it “reeked of a sub-marginal understanding of economics” for the board to give the green light to such a regressive tax increase while saying that another tax increase, of say $3 on every citizen of Madison, would be irresponsible.

You made the argument that the fee should be paid by those who use it, but that’s not the case the board made. It made the case that because we are in a recession, tax increases are detrimental but fare increases are necessary. I know it’s absurd, but that’s what it says in the first paragraph.

Naturally beer is not a vital community service. But the accusation you make of supply side economics holds no merit, because you went ahead to endorse a taxation method that is fundamental to the whole notion of supply side economics in the first place (a flat tax on beer). Regardless of whether the services are vital or not, both taxes are indicative of a particular economic theory, one I can reasonably infer you are not enamored of. And as far as I know, the board didn’t delve into the nature of what a tax increase as an alternative would look like, it just said that was the alternative. That being said, it might be true that the County has no forms of progressive taxation. I’m admittedly not sure about that one either way.

Also, as for social priorities, one can’t separate an understanding of social priorities from one of economics. Granted, whether a more “typical” tax increase was applied or a fare hike is irrelevant simply because the sum being discussed is minimal. But if responsible economic theory isn’t applied then social priorities become impossible goals, and the whole discussion of “responsibility” becomes absurd.

Finally, my apologies on characterizing the fare increase as flat; it’s actually a lump sum. An example in states other than this one would be the horrifically evil, socially irresponsible road tolls they have in many places, whose costs remain unchanged (the horror!) regardless of someone’s economic circumstances.